Modest Weakness Remains Visible On Wall Street - U.S. Commentary

(RTTNews) - While selling pressure has remained relatively subdued, stocks continue to see modest weakness in mid-day trading on Thursday. The losses on the day have partly offset the rally seen going into the close of the previous session.

Currently, the major averages remain in negative territory but off their lows for the session. The Dow is down 55.79 points or 0.3 percent at 17,723.73, the Nasdaq is down 15.88 points or 0.3 percent at 5,079.81 and the S&P 500 is down 3.28 points or 0.2 percent at 2,087.07.

The modest weakness on Wall Street comes as traders continue to digest yesterday's monetary policy announcement from the Federal Reserve, which suggested a December interest rate hike remains on the table.

Many analysts pointed to the fact that the Fed statement removed a reference to global economic and financial developments potentially restraining economic activity.

The Fed's explicit indication that it will assess progress towards its objectives in determining whether it will be appropriate to raise rate at its "next meeting" was also highlighted.

Profit taking may also be contributing to the pullback by stocks after Wednesday's late-day rally lifted the Dow to a three-month closing high.

On the U.S. economic front, the Commerce Department released a report before the start of trading showing a notable slowdown in the pace of U.S. economic growth in the third quarter.

The report said real gross domestic product rose by 1.5 percent in the third quarter compared to the 3.9 percent jump seen in the second quarter. Economists had expected a 1.7 percent increase.

The Commerce Department said the slower growth reflected a downturn in private inventory investment as well as decelerations in exports, non-residential fixed investment, and consumer spending.

Meanwhile, the National Association of Realtors recently released a separate report showing that pending home sales unexpectedly fell for the second straight month in September.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

Sector News

Semiconductor stocks continue to see substantial weakness in mid-day trading, with the Philadelphia Semiconductor Index down by 2.7 percent. The index is pulling back further off the three-month closing high set last Friday.

NXP Semiconductors (NXPI) has helped to lead the sector lower after reporting mixed third quarter results and providing disappointing guidance.

Considerable weakness has also emerged among housing stocks, which have moved lower on the heels of the disappointing pending home sales data. Reflecting the weakness in the sector, the Philadelphia Housing Sector Index is down by 2.3 percent.

Within the housing sector, Meritage (MTH) is turning in one of the worst performances after reporting weaker than expected third quarter earnings.

Utilities, steel, and gold stocks are also seeing notable weakness in mid-day trading, while strength is visible among trucking and natural gas stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan's Nikkei 225 Index edged up by 0.2 percent, while Hong Kong's Hang Seng Index fell by 0.6 percent.

Meanwhile, the major European markets have all moved to the downside on the day. While the U.K.'s FTSE 100 Index has fallen by 0.9 percent, the French CAC 40 Index and the German DAX Index are both down by 0.5 percent.

In the bond market, treasuries have moved notably lower, extending the downward move seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 6.4 basis points at 2.156 percent.